Conventional loan
A mortgage not insured or guaranteed by a government agency such as FHA, VA or USDA. Most follow Fannie Mae and Freddie Mac rules and require private mortgage insurance when the down payment is under 20%.
Also called: conventional mortgage, conventional
Related terms
A conventional loan that meets Fannie Mae and Freddie Mac guidelines, including a maximum loan size set each year by the FHFA. The limit is higher in high-cost counties. Loans above it are jumbo loans.
A mortgage larger than the conforming loan limit for the area, so it cannot be sold to Fannie Mae or Freddie Mac. Lenders often require higher credit scores, larger down payments and more reserves.
Insurance that protects the lender on a conventional loan when the down payment is under 20%. The borrower pays for it, usually monthly. It can be removed once equity reaches set levels, and ends automatically at 78% of the original value.
A mortgage insured by the Federal Housing Administration, allowing low down payments and more flexible credit standards. Borrowers pay an upfront and annual mortgage insurance premium, and loan amounts are capped by county.
The part of the purchase price you pay in cash rather than borrow. A larger down payment lowers the loan amount and can remove the need for mortgage insurance on a conventional loan.